Every service run by the state other than the most sensitive, such as military operations, would be opened up to some form of market-based competition in a radical vision of public sector reform set out by the CBI’s recently appointed outsourcing czar.
Private provision of public services forms a key plank of the employer group’s recommendations for the pre-Budget report – but Adrian Ringrose, who chairs the body behind the proposals, would like to see future governments go significantly further.
The chairman of the CBI’s public service strategy board says contractors and voluntary groups could be involved in areas of the public sector that have hitherto been regarded as politically unpalatable – possibly even frontline policing.
“In implementation, there’s very little, if anything – perhaps other than soldiering – that the state should have an exclusive right to,” Mr Ringrose says in an interview with the Financial Times.
But even though public spending budgets are under historic pressure, policymakers will take some convincing that further outsourcing is necessarily the solution to their woes.
As one of the most developed in the world, the UK’s public service industry already does a lot more than mere back office administration: FTSE 100 stalwarts such as Capita, Serco and G4S do key jobs for central and local government.
According to a study last year by economist DeAnne Julius, the market is worth £79bn (€86.64bn, $128.83bn), employs almost as many people as the NHS and accounts for 6 per cent of gross domestic product.
The industry manages prisons, provides airport security and guards Ministry of Defence sites.
For now, many of the CBI’s specific policy proposals simply involve greater independent involvement in relatively uncontroversial areas such as cleaning and IT. More contracting out of “non-core” public sector functions could save £30bn by 2015/16, the CBI says.
Mr Ringrose, who is chief executive of Interserve – the support services group whose contracts include maintaining mock-up Iraqi towns, where British soldiers do pre-operational training – says there is scope for a lot more.
“Some areas of public service have borders at the moment where the market provides up to there, but not beyond. The market could go beyond and start providing services that are currently reserved to government.”
“You don’t want private armies, no, but … if you look at the American model of military logistics support it is, you know, contractualised virtually up to the finger on the trigger.”
Is that desirable? “If it’s properly structured, yes,” he says.
The government’s role should be to set “what the rules of the game are, what the standards of acceptability are” – not necessarily to deliver.
In spite of the opportunities for support service companies presented by outsourcing, industry executives recognise that cuts to specific government programmes present a significant risk for those exposed to capital spending budgets.
Still, Mr Ringrose says the squeeze in public finances has at the same time made policymakers more receptive to his views. “I think that’s a very constructive environment for a radical redefinition of how public services should be delivered … It’s been driven more by necessity than by an aspirational philosophy.”
Conscious that he represents the interests of private companies that bid for outsourcing contracts, Mr Ringrose is keen to stress that the CBI wants to promote “marketised choice” and not private sector provision per se.
As for chances of success, he says: “You can certainly see instances where our message has stuck.”
Source: http://www.ft.com/cms/s/0/35e5c044-bc20-11de-9426-00144feab49a.html
